TABLE OF CONTENTS
DEDICATION ....................................................................................................................... I
DECLARATION ................................................................................................................... 2
APPROVAL .......................................................................................................................... 3
ACKNOWLEDGEMENT ..................................................................................................... 4
ABSTRACT .......................................................................................................................... 5
TABLE OF CONTENTS ....................................................................................................... 6
CHAPTER ONE .................................................................................................................... 9
1.0 Introduction .................................................................................................................... 11
1.1 Background of the study ................................................................................................ I I
1.2 Statement of the problem ................................................................................................ 12
1.3 Purpose of the study ....................................................................................................... 13
1.4 Objectives of the study ................................................................................................... 13
1.5 Research questions ......................................................................................................... 13
1.6 Scope of the Study ......................................................................................................... 13
1. 7 Significance of the study ................................................................................................ 13
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1.8 CONCEPTUAL FRAME WORK ................................................................................. 14
1.8.1 The impact of Credit Policy and Loan recovery in Commercial Banks ........................ 14
CHAPTER TWO ............................................................................................................... 15
LITERATURE REVIEW ..................................................................................................... 15
2.0 Introduction .................................................................................................................... 15
2.1 Credit policy .................................................................................................................. 15
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2.1.1 Credit standards; ......................................................................................................... 16
2.1.2 Credit terms; ............................................................................................................... 17
2.1.3 Collection procedures according to Eugene(2016); ...................................................... 17
2.2 Loan Recovery ............................................................................................................... 17
2.2.1 Improved bank productivity and sustainability; ........................................................... 18
2.2.2 Tiinely repay1nents; ..................................................................................................... 18
2.2.3 Reduced loan defaults .................................................................................................. 18
2.3 The relationship between credit policy and loan recovery ............................................ 20
METHODOLOGY .............................................................................................................. 22
3.0 Introduction .................................................................................................................... 22
3.1 Research design ............................................................................................................. 22
3.2 San1pling designed ......................................................................................................... 22
3.2.1 Targeting population ................................................................................................... 22
3.2.2 Sa1nple size ................................................................................................................. 22
3.2.3 Sa1npling 1nethods ....................................................................................................... 22
3.3 Data sources ................................................................................................................... 23
3.4 Methods instruments of data collection .......................................................................... 23
3.5 Data processing, Analysis and Presentation .................................................................... 23
CHAPTER FOUR ................................................................................................................ 24
PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS ................................. 24
4.0 Introduction .................................................................................................................... 24
4.1 Demographic characteristics ....................................................................................... 24
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4.1.2 Age of respondents ...................................................................................................... 24
4.13 Marital status of respondents .................................................................................... 25
4.1.4 Level of Education of respondents ............................................................................... 25
4.1.5 Types of loans offered by Centenary Bank .................................................................. 26
4.1.6 Sectors Centenary Bank extend loans to ............................................................... 26
4.2 Credit Policy ............................................................................................................... 26
4.4 Findings on the relationship between credit policy and loan recovery in Centenary bank 37
CHAPTER FIVE ................................................................................................................. 38
SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS ..................................... 38
5.0 Introduction .................................................................................................................. 38
5 .1 Su111n1aries of findings ................................................................................................. 38
5.1.1 Procedures followed in loan recovery by Centenary Bank ........................................ 38
5.1.2 Factors that influence loan recovery in Centenary Bank ............................................ 38
5.1.3 Relationship between credit policy and loan recovery ................................................ 38
Conclusions ......................................................................................................................... 39
5.2 RECOMMANDA TIO NS ........................................................................................... 39
Areas for further Research ................................................................................................... 39
REFERENCES .................................................................................................................... 39
ABSTRACT The study was carried out to investigate the impact of credit policy on loan recovery in commercial banks. The major objectives will be; to establish the procedures followed in loan recovery, to find out other factors that influence loan recovery and to establish the relatioship between credit policy and loan recovery in commercial banks. The study employed 40 respondents at Centenary Bank on plot 7, Talenta House, Entebbe road. The data was collected and discussed based on the research objectives. Questionnaires were mainly data collection instrument supported by interviews. The collected data was both qualitaive and quantitative using frequency tables and spearmans correlation analysis. Findings on procedures used in loan recovery are reducing on credit periods, use of loan ammortisation schedules,taking over properties presented as collateral at the time ofloan application, holding group members for group loans. Other factors that affect loan recovery included information asymmtry, high interest rates fluctuating foreign exchange rates and lack of sensitisation to the loan beneficiaries. Therefore the research study established that the relationship between credit policy and loan recovery very strong (r=0.89) using the Spearmans Correlation Analysis.
